505: Annotated Bibliography. Policy selected: Minimum Wage

Annotated Bibliography
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Annotated Bibliography
Policy selected: Minimum Wage
Addison, JT., & Blackburn, ML 1999, Minimum Wages and Poverty. Industrial & Labor Relations Review, 52(3), 393
Qualitative article: the authors of this article employ a reduced-form approach in studying the link between changes in the minimum wage and the levels of employment of the young adults and teens. Both authors are Professors in the Department of Economics at the University of South Carolina. According to Addison and Blackburn (1999), earlier researches on the effects of minimum wages on poverty have revealed that minimum wages actually decrease the rates of poverty, with simulated effects which seem to be rather strong. Different from simulation treatments, the approach employed by Addison and Blackburn (1999) minimizes the need for building a restrictive and unrealistic model to evaluate the effects of minimum wages on poverty. Their findings show that the rates of poverty amongst the groups that are most likely to be affected by minimum wage raises are at least twice over those of prime-age people. There is proof of a poverty-reducing effect of minimum wages for junior high dropouts and teenagers; this proof is obtained from reactions to minimum wages which were raised in the ‘90s. Similarly, a study conducted by of Neumark and Wascher (2002) cited below showed that the minimum wage increases the chances of poor families to escape poverty.
Brown, C., Gilroy, C., & Kohen, A 1982, The Effect of the Minimum Wage on Employment and Unemployment. Journal of Economic Literature, 20, 487-528
Qualitative article. Charles Brown is a researcher at the National Bureau of Economic Research and a professor at the University of Maryland. Curtis Gilroy is a researcher at the U.S. Army Research Institute, and Andrew Cohen is a professor at James Madison University. In this article, they state that the most fundamental minimum wage model on unemployment and employment centers on one competitive labor market with uniform workers whose wage would be lower than the legally defined minimum wage. If the rates of employment would increase, the decrease in employment predicted by the simple demand-supply model can take the form of a lower employment growth rate and not an actual drop in the number of persons employed. A popular exemption to the conclusion that minimum wages would reduce the rate of joblessness is the monopsony case. A minimum wage that is between the original monopsony and the competitive wage would increase the rates of employment. A 10% raise in the minimum wage is approximated to bring about roughly 1%-3% decrease in total employment. This finding is somewhat similar to that of Partridge and Partridge (1999) cited below who found that in increase in minimum wage leads to an increase in the rates of long-term joblessness.
Even, WE., & Macpherson, DA 2003, The Wage and Employment Dynamics of Minimum Wage Workers. Southern Economic Journal, 69(3), 676-690
Qualitative article: William Even is a professor in the Department of Economics at Miami University whilst David Macpherson is a professor in the Department of Economics at Florida State University. In their study, the authors of this article used 20 years of short panel data sets on minimum wage workforce for the purposes of improving the understanding of the employment and wage dynamics of minimum wage workforce in many respects. They constructed 2 samples of minimum wage workforce from the CPS-ORG files from the year 1979 to the year 1999. Additionally, they created a comparison sample that comprises the earnings of employees higher than the minimum wage during the initial year of the panels. The shifts into minimum wage job are from non-employment or from work whose wage was at, higher than, or lower than the minimum wage. Minimum wage jobs are usually entry-level jobs. Depending on wage growth source, moving from one employer to another would have differential effects on wage growth. This article is different from all the other articles cited in this paper since no other article demonstrates that job training provided by a company or organization has greater positive result on wage increase for workers earning the minimum wage than those who earn higher than the minimum wage.
Fields, GS., & Kanbur, R 2007, Minimum Wages and Poverty with Income-Sharing. J Econ Inequal, 5:135-147
Quantitative article. G.S. Fields is a professor in the School of Industrial and Labor Relations at Cornell University and R. Kanbur is also a professor at Cornell University. In this article, Fields and Kanbur (2007) utilize various theoretical models to illustrate the conditions in which a greater minimum wage increases poverty levels and when it does not. They point out that given that a greater minimum wage would raise unemployment levels in the textbook model, then it would also raise poverty levels. The textbook model basically specifies that within a competitive labor market, introducing a minimum wage that is higher than the competitive equilibrium wage would actually lead to unemployment. Using the textbook model, Fields and Kanbur (2007) concluded that if the minimum wage in the country is greater than the poverty line, then additional raises of the minimum wage would increase poverty rates. Besides the textbook model, the social sharing model and the family sharing model were also employed by the authors. They found that there are circumstances wherein a higher minimum wage reduces the levels of poverty, others in which it increases poverty, and in other situations wherein poverty rates remain unchanged. Unlike the other articles cited in this paper, this is the only to reveal that higher minimum wages may actually reduce, increase, or not affect the poverty rates.
Grossberg, AJ., & Silician, P 2004, Legal Minimum Wages and Employment Duration. Southern Economic Journal, 70(3):631-645.
Quantitative article. Adam Grossberg is a professor in the Department of Economics at Trinity College while Paul Silician is a professor in the Department of Economics at Grand Valley State University. In this article, Grossberg and Silician (2004) utilize young women and men in the 1988-94 rounds of the National Survey of Youth to approximate the association that exists between turnover hazard and the minimum wage. The minimum wage has potentially counterbalancing consequences on turnover in states where the wage is low. Grossberg and Hawley (2004) found that in states in which the minimum wage is low compared with the state’s median age, the men earning the minimum wage have a lower worker-initiated separation hazards relative to other workers who are getting low wages. Moreover, as the minimum wage increases compared with the current median wage, men who are earning the minimum wage are more and more likely to quit their employment at any time. Grossberg and Hawley (2004) also reported that whenever the minimum wage is great compared with the median wage, men earning the minimum wage have considerably greater worker-initiated separation hazards relative to others workers hired at low wages (Grossberg & Silician, 2004). This article is different from all the oth...